Failing to Update Beneficiary Tax Forms Can Lead to Legal Battles

Olshan Employee Benefits and Tax & Personal Planning partner Stephen Ferszt authored an article in Bloomberg Tax entitled “Failing to Update Beneficiary Tax Forms Can Lead to Legal Battles.” The article concerns recent federal court rulings that underscore the importance of maintaining up-to-date beneficiary designations for retirement plans, life insurance and other financial accounts. Failure to review and update these designations—particularly after major life changes like marriage, divorce or the death of a loved one—can result in unintended outcomes and legal disputes. “Regular review and updates to beneficiary designations, especially after major life events, is essential. Following a plan’s specific procedures for designating or changing beneficiaries is imperative. Consulting with legal and financial professionals can ensure beneficiary designations align with overall estate planning goals,” Steve explains. These cases serve as a cautionary tale about the critical yet frequently neglected task of keeping beneficiary designations current.